question for anyone who knows about online business

[mikepmcs]

Without taking too much of a shellacking.  Does anyone know how one would go about becoming a distributor for like say comp cams, holley, msd, etc...... Do I just solicit the companies, do I need to present a business plan to them, etc....

Think Summit Racing or Jegs. I know they have a warehouse full of parts but I know other companies strictly drop ship.  I've noticed some ebay companies that sell aftermarket grill guards and accessories for vehicles and such, that is what i would like to do.  Those examples are lofty goals but that would give you some idea of what I'm talking about.

I was wondering how to start such a business and sell only high end performance parts and other related products. 

I guess middleman(sort of) is the operative word here.

If anyone can point me in the right direction, I would appreciate it.

v/r
Mike

[Arthu®]

Alright I have a question to start with. What would set you apart from the others?

I don't think a lot of companies would ask you to present them a businessplan to become a distributor. I do however think it would be a good idea to do it for yourself. It would clearify for yourself what you exactly would like to do, how much it is going to cost you (all private equity or maybe you need some investors (in which case you are going to need a business plan anyways)), how do you want to distribute, look at the possibilities.

I mean this site might be a great start to promote your service but it's still only a couple of 100 at best that really look at it. Say half of those couple of hunderd buy a performance part this year. Let's say there is a 50% chance (just a hunch) that you are carrying the product if you can deliver for a competitive price you will probably get those customers from this site. However that would still only be a 100 or so orders per year. That would definitly not be enough to make a living of.

So what are you going to do for promotion, just a website or are you also going to print catalogue's. What exactly are you going to carry, just about everything a little bit of everything or something specific. I mean cams and aftermarket grill guards are kind of diverse.

Next is the location, is your location good? I noticed you are in Maine which is in the northeastern part of the US right. If you consider becoming a dealer with a warehouse this becomes of great importance as a lot of your customers will be further away from you than if you were let's say located somewhere more in the middle.

Not knocking on your idea just throwing some stuff out there. Just think you should think long and hard before starting a business. Otherwise it would just be a waste of money and time.

Arthur

[Troy]

I can't tell you specifically how everyone operates but I know a few things as I helped out at an online mountain bike parts store and a couple of small car stereo shops. First of all, most manufacturers require proof that you have a business before they'll sell direct to you so you need to set that up first. Sometimes they have a contract stating how much you must buy/sell to keep your status as a vendor. Many places have a "buy-in" amount which is the minimum order you're allowed to place or at least the minimum for your very first order. One way around this (if you can't sell a whole lot) is to buy from another middleman like Summit or Jegs. You can place bulk orders through them and get a discount. Of course, you get less profit because they take some off the top but you have a greater variety of parts, the minimums are lower, and they aren't likely to drop you if you don't purchase for a while. Nothing sucks more than to lose your vendor status from a manufacturer so this is a way around that. The best thing to do is pick a few items you want to sell and start contacting the manufacturers directly to see what they require to be a reseller. They are all a bit different. If you cannot afford the up front costs then start talking to large retailers about business accounts. If all else fails, start talking to local speed shops about business accounts. The mechanic I use gets a 15% discounts on the same parts that I buy at the store (Napa, Carquest, AutoZone) and only marks them up 10% when he installs them. He makes a little extra cash from the sale of the parts and it ends up cheaper for me.

Drop shipping saves you a huge amount on inventory and shipping costs - especially on large parts. A lot of restoration parts suppliers do this (Dante's for example). I think most of the businesses I've seen on eBay also do it. As a matter of fact, setting up an eBay store doesn't seem all that difficult so maybe there's a tutorial on that somewhere. There are ways to determine if the item you're selling is in stock from your vendor so it's pretty fool proof. Every now and then there's a mix-up so you have to be prepared to make things right with your customer (not their fault you sold an item you didn't have).

As for differentiating yourself, I firmly believe that most people shop on price. Sure it's great to have wonderful customer service and a good return policy but I know people who buy from the crummiest places around to save 35 cents. Then they complain of course.

Troy

[mikepmcs]

Arthur
Great responses and questions all!

This would be strictly on line with no warehouse and product inventory, strictly drop ship from the manufacturer.

My site would be uhum...ebay to start and then create a website with domain in the future....like Mikes Performance Parts or something to that nature(not that just an example) and of course pay to have it advertised and be at the top of the search engine.

As far as this site, of course I would advert here and of course give member's as much off as I could to still make a dollar or two but not my survival clientele, if that makes sense.
DC members would be the exception to the rule as far as the business would go.

I have no investors and no money(retiring military), i'm just throwing this out there to see what people say about the idea and see if it can be done(by me)

I would basically sell anything that people would let me pimp for them as long as it is vehicle related...aftermarket accessories, headlights, trim kits, winches, guards, carbs, engine parts, cams, etc... you get the idea. Whatever I can sell I will as long as it is quality, known names.

I know it's a pipe dream, but hey, it worked for whomever started summit.

v/r
Mike

[Troy]

By the way, selling brand names makes competition even harder. For instance, in the computer parts or bike parts world I know that the same product number from the same manufacturer will be exactly the same no matter where I buy it. In that case I generally search online for the best deal from a trusted company. In many cases shipping is cheaper than the taxes I'd have to pay if I picked it up in the store down the street. (Yeah, I know you're supposed to pay taxes on items bought out of state.) Sometimes I can't even buy the items I want from any stores locally so mail order is the only option. If the item isn't a global brand name then you usually can have a higher markup (less competition). In that case I'd stay limited in the amount of products you have. I don't think this is the direction you're going but I thought I'd mention it any way.

I wouldn't pay too terribly much to get ranked higher by search engines but that's just me.

Troy

[mikepmcs]

Troy
Good stuff, thank you.

Yes, ebay has a very detailed tutorial and I plan to print it all out, as i've done before in the past, and ingesting it.

In my mind I just keep seeing that SEC infomercial with Howard Cunningham(tom bosley) all the time at 0200 when i can't sleep.  They sell knick knacks but i'm thinking why can't I do that with high end stuff??

I'm very customer service oriented and have done that believe it or not ...in the Navy, for the past umpteen years.  I love people and like to do the best I can for everyone I come in contact with.

You are right on the price deal, everyone wants a good deal so undercutting is the way to go.  make a little less profit but get more consumers.  It's all in the way you handle people and a good no questions return policy is a must no matter what the problem might be.

I myself, am more apt to pay the higher price just because I like the vendor i'm dealing with.  Call me weird but customer service goes a long long way.

Glad you hit on Dantes cause that is the vendor I couldn't think of when I first posted, but yes, how are they doing it, that's what I want to know.

The ideal combo is CS, return policy, price, return business. Not in that order but that combo.


v/r
Mike

[mikepmcs]

Once again Troy, you are right on.  I almost buy everything online these days cause of that same scenario.

Best Buy and Walmart are good examples of this.

As far as the search engine thing, there is other research I can do to get it up there on the charts with lesser cash out.  I've become pretty computer savvy in my last 2 months slothing around at my house.  I'd probably build the site myself and stuff the ad words in there to get to the top.  crickee', there is money in ad words alone, maybe I should go that route.
v/r
Mike

[GTX]

Mike,

If you build it, they will come... or at least I would.
I'd rather buy from someone I know any day even if it's at slightly higher cost on occasion just to feel better about shelling out my money and especially any credit info. The bear is actually getting off the ground. I used to know a guy who raced 426 max wedge cars and I think he sold stuff. I was going to buy from him but he didn't have MSD at the time which is what I wanted, he had Crane boxes.

Build the site, get the distribution rights and people will come slow and sure. As long as you are 110% honest and get the rep of going the extra mile to make things good your name will grow and people will buy. We've all seen how certain names who sell parts on Ebay have been passed around as being good to buy from.....or not. 

Since Stupidshops went away here there is only a Checker Auto that has a small performance desk but it's mostly all mail order anyway especially anything Mopar and big block the most.  I'd rather buy from home and from someone I know myself. I stress quite a bit buying stuff online.





 

[mikepmcs]

Dave, you are right on the money!

In my case it would never be higher cost, due to the fact that I would research and make sure I have the best prices.  I don't want to be rich, I just want to provide the product, treat the buyer the best, and be able to pay the bills.

A lot of us here live in remote areas and are in the same position as I am. Believe me, I know, there is no performance shop reputable within 2 states.

I would most definitely go the extra mile... Treat others as you wish to be treated.. I live by that code, if you will.

The same reason to this day(20 years later)  I still fix anyone's car for free.  I worked for Chrysler as a front end mech before I joined the Navy.  Couldn't stand the fact that the Service Manager's job was to sell something they didn't need.  This is, and always, has been my penance.

v/r
Mike

[skip68]

On another note Mike,
I think you should sell your jewelry too! I make and sell jewelry as well! I can give you some tips if you want to market your stuff! Hell, I want some pieces for myself!!! Let me know or call us! By the way, we had a nice time talking to you the other day! The drag races I took Chuck to were killer! But unfortunately my digital camera %$^&$ up! Sorry! No pics! Some motorcycle guy wiped out on the track right in front of us! He was OK though! Would of made a great photo!
Mrs.Skip68

[gtx6970]

I'll hit on this a little.

MOST (but not all ) companies require buyins, the buy in determines the wholesale price  levels you pay for a particular part or parts. Essentially the larger the initial  buy in gets you  the highest percentage off suggested retail..... Something to keep in mind on this is that most dealers do NOT sell at retail. Unless you get lucky and sell something absolutely no one else has you will have competition

About every manufacture I deal with  require minimum order dollar amounts to retain wholesale pricing levels, and most require minimum annual sales to keep the wholesale price levels in place.

Do you want it to be just a hobby or something more, Decide this FIRST. Figure out where you you want it to be in five years and go for it, I did.
I've been doing A+M for just over 4 years, I plan to take it full time and walk away from being a  Mopar dealership Auto Tech the end of this coming May. 2006 was the first year It's finished in  the black ( on paper )
I had a 5 year year plan when I started.

[JimShine]

Mike, I know you could do it. I think the best thing you could do that would set you apart from most other shops is to get involved with the best companies and stay current on what is reproduced. Once a new item is out on the market, make it available. There are many people that do not have the time to research prices. Being able to go to one place to buy quarters, seat covers, console parts, etc knowing you stock the best available is worth a couple bucks more than tracking the same stuff down and ordering it all seperately to save a couple bucks.

[GTX]

When I sell arcade machines sometimes I end up taking it in the shorts to go the extra mile.
Once a sold a couple of Ms Pacman machines to a couple of guys who were building new homes down South by Charger_Fan. I told them to be very careful of static electricity if they put them in a carpeted room but they managed to blow one of them up anyway. I ended up having them bring it back to me and I changed out the main board and had to repair it later, swapped a power supply and even part of the harness just to be sure of no more problems. I hated to do it but at $1000.00 a pop I wanted to keep them happy.

They came back and bought two more machines from me. Being stand up goes a long way.

Dave, you are right on the money!

In my case it would never be higher cost, due to the fact that I would research and make sure I have the best prices.  I don't want to be rich, I just want to provide the product, treat the buyer the best, and be able to pay the bills.

A lot of us here live in remote areas and are in the same position as I am. Believe me, I know, there is no performance shop reputable within 2 states.

I would most definitely go the extra mile... Treat others as you wish to be treated.. I live by that code, if you will.

The same reason to this day(20 years later)  I still fix anyone's car for free.  I worked for Chrysler as a front end mech before I joined the Navy.  Couldn't stand the fact that the Service Manager's job was to sell something they didn't need.  This is, and always, has been my penance.

v/r
Mike

[Arthu®]

Alright I am not familiar with online business as I have never worked for one, but from I read in this thread:
*Return policy: Would it go directly back to the manufacturer or would it go by you? Who would pay the shipping, you, the manufacturer or the customer? Since the profit margins won't be very high as the internet, returns could easily kill any profit or even make it a loss.
*Customer Service: Like Troy said a lot of people just look for the best price, it is a fact that customer service takes up a lot of time = money. So unless you look at it as more of a hobby to keep you busy other than a profitable business I think it could kill you in the long run. Once you gain in clientelle the customer service will also begin to take up more and more and more time. So unless you would want to keep up with that you would have to either stay small or start hiring someone in the future. Which would evidently run up the cost.

I do believe a business should grow and keep growing, I have seen however at some of the places I have worked and what I have learned in school is that most entrepreneurs don't take it into consideration. There are ways to notice that, one customer service will go down the drain, simply due to the fact that there is no time. Or it would take them forever to get done whatever you asked for.

Just also figure out what you might want to do in the occasion of that it will grow fast and you would have to expand your enterprice in order to keep up with the demand. If you couldn't cope with the demand, so you would have to let people wait and stuff than you will get a bad name very fast. Remember bad news travels fast... Also it has been shown that people tell a bad experience to about 10 of their friends and a good experience only to like one.

Arthur

[mikepmcs]

On another note Mike,
I think you should sell your jewelry too! I make and sell jewelry as well! I can give you some tips if you want to market your stuff! Hell, I want some pieces for myself!!! Let me know or call us! By the way, we had a nice time talking to you the other day! The drag races I took Chuck to were killer! But unfortunately my digital camera %$^&$ up! Sorry! No pics! Some motorcycle guy wiped out on the track right in front of us! He was OK though! Would of made a great photo!
Mrs.Skip68

Lisa
I will take you up on that one.  I've thought about it but my stuff is pure silver and ebay is not the way to go.  Every piece I make costs at least $20 in materials to make and I have researched the bay and found that the stuff doesn't sell so well.  Help me, I'm a sponge.

On another note, what do you want I will send it to you free.  I have given most of everything away cause Maine is not a buyers market for this.  You want something special let me know and I will make it for you.

gtx6970, thank you for the real life experience, I am not in that position.   Everything I do is in my head.  I am a wacko with numbers but do not have any plan as of yet.   I don't have up front cash to pour in either, so I guess that isn't gonna happen. Darn!

Thank you everyone for your responses thus far, and please, keep em' coming.

v/r
Mike

[gtx6970]

I'm not trying to knock your idea. Hell I had the same idea 5 years ago and this is where I'm at today. I'll be taking it full time the end of May. I'm not redy to retire mind you BUT it does make a little money and i really like doing it, which was my main objective when I started A+M , I wanted something to supplement the dealer tech income, But it was mandatory I liked what I was doing
SO for me something related to the old cars was a giiven and since I'm a detail nut , A+M was born.

So if you put your mind to it , you CAN do anything. My one piece of advice is the same Tom at R/T Specialties told me,,,,,, DO NOT try to get big overnight.aka bite off anymore than you can chew.

If I can help feel free to call.

Bill